Gold Price Forecast: Slips From $4,500 as Profit-Taking Builds—Why $4,400 Is Now Key
Gold (XAU/USD) is hovering around $4,433 after another day of easing off, which isn't all that surprising given it couldn't quite make...
Quick overview
- Gold (XAU/USD) is currently around $4,433, facing resistance at $4,500 while traders take profits after a strong run.
- The US dollar has gained slightly due to mixed economic data, but it hasn't significantly impacted gold's price movement.
- Geopolitical risks continue to support gold prices, keeping investors cautious despite recent market fluctuations.
- Key levels to watch for gold include the $4,480-$4,500 resistance and the $4,398 support level, with a positive sentiment as long as it holds above $4,275.
Gold (XAU/USD) is hovering around $4,433 after another day of easing off, which isn’t all that surprising given it couldn’t quite make it past that pesky $4,500 resistance line. But the downward movement isn’t so much a sign of a change in feelings as traders taking some profits off the table. After all, gold had just had a strong run up from those November lows, so a lot of people will want to cash in while the going is good – especially as the US dollar shows a bit more muscle after mixed US economic numbers.
But don’t mistake this for a truly bearish tone – the overall mood is more cautious than anything else. With ongoing geopolitical risks still looming, gold is being propped up by investors playing it safe, which in turn is keeping it from taking a really big dip.
Dollar Takes a Slight Uptick – Geopolitics Still the Main Game
The US dollar has picked up pace after recent US data that looked mixed. The Services activity numbers actually looked better than expected, rising to 54.4 – meanwhile, the labour numbers weren’t quite as hot as they were billed. Private payrolls only added 41,000 jobs, and job openings slipped to 7.15 million – so hiring demand isn’t looking quite as strong as it once was.
So that’s good for the dollar – but not so much that it’s making people run for the hills. For gold, the dollar’s not strong enough to stop it going up, but not weak enough to stop it going down either. That’s a delicate balance, and one that gold is still dancing with.
At the same time, though, those geopolitical risks are still out there, still unresolved. The initial shock from what’s been going on in Latin America has started to fade, but there are still plenty of other potential hotspots – and investors are still playing it safe as a result.
Gold – What’s It Up to?
Looking at the charts, gold is still in a pretty good space. The price is still sitting within a rising trend that started back in November, and even though it’s come close to the highs, the candles are still pretty small, and the upper wicks aren’t as long as they used to be, which is a sign that buyers are slowing down a bit, but not quitting.
The key levels to watch are:
- That $4,480-$4,500 resistance line – that’s where a downward trendline is keeping the gold price in check
- The $4,398 level below that – that’s a 38.2% Fib retracement and a near-term support
- Then there’s $4,338 – that’s the level where the gold price was before, and it has a bit of history to it
And the momentum indicators all look pretty good too – the RSI is in the mid-50s after getting overbought, so momentum is starting to normalise – but it’s not going negative or anything.
What to Do Next with Gold
As long as gold holds its rising trendline at $4,275, the overall positive sentiment for gold remains intact. Consolidation around that $4,400 area is more likely than a sharp downturn – especially with all the big US numbers still due out.
Trade idea: Buy gold when it dips back down to $4,400, aim for $4,500, but don’t risk too much below $4,330.
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